Obama says ‘special relationship’ with U.K. survives Brexit

President Barack Obama said Friday that the U.S. respects the decision of U.K. voters to leave the European Union, and that the “special relationship” between the countries would endure.

“The United Kingdom and the European Union will remain indispensable partners of the United States even as they begin negotiating their ongoing relationship to ensure continued stability, security, and prosperity for Europe, Great Britain and Northern Ireland, and the world,” Obama said in a statement less than 10 minutes before U.S. markets opened.

In deciding to quit the European Union, British voters spurned Obama’s plea to stay and put new strains on their nation’s relationship with the U.S. on issues from trade to defense.

“Obama, with his great status in Europe -- if he couldn’t sway it, it’s an indication things have changed,” said Conor McCann, a Dublin-based political affairs analyst with Massif Global.

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The S&P 500 was down about 2.4 percent at 10:42 a.m. in New York.

‘Ties that bind’

The American president, who remains more popular in Europe than at home, drew praise for helping and criticism for meddling when he traveled to London in April to help Prime Minister David Cameron -- who said he will step down -- in his campaign for a vote to stay. Obama said then that he hoped “the ties that bind Europe together are ultimately much stronger than the forces that are trying to pull it apart.”

Obama was briefed on the U.K. returns and was expected to speak to Cameron today, according to a White House statement.

Now that British voters have rejected Obama’s arguments, it will fall largely to his successor to cope with the results because it’s expected to take two years for the U.K. to extricate itself from the EU.

Presumptive Democratic nominee Hillary Clinton echoed Obama’s call for a continuation of the U.S. commitment to the U.K. and Europe in a statement Friday, but she added that the economic uncertainty created may hurt working families and requires a U.S. president with experience.

Clinton reaction

“This time of uncertainty only underscores the need for calm, steady, experienced leadership in the White House to protect Americans’ pocketbooks and livelihoods, to support our friends and allies, to stand up to our adversaries, and to defend our interests,” Clinton said. “It also underscores the need for us to pull together to solve our challenges as a country, not tear each other down.”

In Scotland, presumptive Republican nominee Donald Trump praised the Brexit vote while promoting his Trump Turnberry golf resort. The falling value of the pound might mean more visitors to the resort, he said.

“You know, when the pound goes down, more people are coming to Turnberry, frankly,” he said. Britons have “taken back their independence. And that’s a very, very important thing.”

House Speaker Paul Ryan said that markets “will eventually stabilize” and that the U.K. remains “an indispensable ally.”

Contingency planning

White House Press Secretary Josh Earnest said this week that the U.S. was planning for steps it would take under a British exit, or Brexit, just as it prepares for many contingencies.

As a result of the vote, the British may have less influence in shaping European policies, from the future direction of the economic bloc that is America’s largest trading partner to military affairs.

The decision will have a direct impact on the U.S. because of American reliance on the U.K. for security and trade matters across Europe, said Mary Nugent, who teaches U.K. politics at Rutgers University in New Jersey, where she is a doctoral candidate.

“The political alliance the U.K. has with the U.S. is really important,” said Nugent, who previously worked for a Labour Party member of the British parliament. “The fact that the U.K. is no longer going to be at the table in the European Union is going to be a big blow to U.S. diplomacy and trade negotiation.”

Obama raised the risks of declining British influence in sharp terms during his London visit. He warned that the U.K. would fall to the “back of the queue” for future U.S. trade deals and said “if you start seeing divisions in Europe, that weakens NATO. That’ll have an impact on our collective security.”

Those dire predictions had little impact on the referendum results.

‘Egg on his face’

“President Obama clearly has egg on his face,” said Nile Gardiner, director of the Heritage Foundation’s Margaret Thatcher Center for Freedom.

Cameron on Friday said he will leave office by October, and Obama is unlikely to have as close a relationship with his successor -- especially if it’s Boris Johnson. The voluble former London mayor, who was a leading campaigner for the Brexit, said Obama’s intervention on the other side may stem from an “ancestral dislike of the British empire” because of his Kenyan roots. The remarks were widely condemned in the U.K.

Now, the U.S. will begin the long process of adjusting to the new British reality, including the fallout for business and finance.

That will include an assessment of what the referendum results mean for U.S. financial services companies that conduct euro-denominated business in London, McCann said. If it’s determined they should move to another European financial hub, such as Frankfurt or Dublin, the effect would be disruptive, he said.

Financial regulations

The change could be positive for U.S. businesses because it could free those operating in the City, London’s financial center, from EU financial regulations, Gardiner said in an interview from London.

“Brexit actually makes it easier for U.S. companies to operate because I think that EU financial regulations are job-killers and make it much harder to do what you need to do to advance prosperity on both sides of the Atlantic,” he said.

Markets worldwide dropped Friday as investors sought to determine the impact of the vote.

“Nothing happens the next day other than a lot of confusion and market volatility,” said Heather Conley, director of the Europe Program at the Center for Strategic and International Studies in Washington. She predicted that many an emergency meeting would be convened on Friday by government and business leaders in the U.S. and the U.K.